May 24, 2015

The Swedish model (part 1)

Bob Schieffer: Let me just start out by asking you, what is a socialist these days? I mean, I remember when a socialist was somebody who wanted to nationalize the railroads and things like that.

Bernie Sanders: When we talk about Democratic socialism, I think it’s important to realize that there are countries around the world like Denmark, Norway, Sweden, Finland, who’ve had social democratic governments on and off for many, many years. And we can learn a whole lot from some of those countries.

Sweden is a funny country to call socialist. In France or Austria the government owns a much larger share of industry, and I would expect that in a socialist country personal income taxes would be low and company taxes high, whereas in Sweden it is the opposite. It has the world’s highest personal income taxes and it’s a tax haven for companies!

–A statement made in 1976 by Rune Hagelund, a member of the board of the Swedish Employers’ Federation (SAF), a former professor of economics, and president and chairman of the board of two of Sweden’s major corporations.

In my freshman year at Bard I was a 16-year-old wet-behind-the-ears libertarian who got schooled by upperclassmen why Sweden’s welfare state was a good thing (from my unpublished memoir):

After being converted to a Camus-styled liberal, I naturally became predisposed to the welfare state and voted for LBJ in 1964 in the expectation that he would govern as a New Deal reformer, which he did for the most part.

When the war in Vietnam began, I radicalized and joined the Trotskyist movement out of a belief in part that the New Deal was a fraud, just something to help keep American capitalism afloat, which was after all FDR’s hope. I never thought much about Sweden in this period except to welcome its socialist Prime Minister Olof Palme as an ally of the antiwar movement. I was also happy to see Swedish material aid to Nicaragua when I was working with Tecnica. So, all in all, Sweden had a much more benign image for me even if I understood it operated on the basis of capitalist property relations.

In 2014, after having read a couple of Stieg Larsson novels and watching Swedish TV adaptation of Marxist detective novels by other writers, I began thinking more deeply about the Swedish model. It was these writers focus on the corporate/fascist presence that motivated me primarily but I always wondered in the back of my mind how Sweden became such a success story, at least enough of one to allow Bernie Sanders to embrace it unabashedly.

In writing about the ultraright, I discovered that Sweden had a chummy relationship with Nazi Germany during WWII. I didn’t realize at the time I was exposing this relationship in a CounterPunch article that it was the Social Democrats who were in power, not some rightwing party. Prime Minister Per Albin Hansson advocated a national front that included all the parties except for the CP.

While the image we have of Sweden is one of resistance to Nazism, based on the country providing a haven for Jews and Raul Wallenberg’s efforts on behalf of Hungarian Jews, it is worth noting that the Wallenbergs—arguably the most powerful capitalist family in Sweden—were capable of cutting deals with the Nazis after the fashion of the socialist Prime Minister as an article in a Bay Area Jewish newspaper reported:

The Wallenberg documents shed light on “Sweden’s involvement with and collaboration with the Nazis during the war,” Steinberg said.

“Sweden is clearly emerging as one of the places where the Nazis moved assets.”

According to the documents, The Enskilda Bank, owned by Jacob and Marcus Wallenberg, Raoul’s uncles, dealt in large black-market operations, money laundering and concealing German investments in the United States.

The documents also contain evidence disproving the belief in some circles that Marcus Wallenberg was on the side of the Allies. He traveled to the United States in 1940 on behalf of German interests to buy back a block of German securities being held by America, according to the documents.

The disclosed information about the collaboration between the Nazi regime and Marcus and Jacob Wallenberg suggests a reason for the feeble attempt to find their nephew.

“It’s long been out there that the Wallenberg family in Stockholm apparently did very little to locate Raoul after his disappearance into the Soviet gulag in January 1945,” Steinberg said.

Perhaps the main reason Sweden has such an elevated status is its ostensible commitment to the welfare state. In a period of deepening austerity, the fact that there was a nation like Sweden that apparently departed from the neoliberal model for well over a half-century had a tendency to mesmerize Bernie Sanders and allow the more Marxist-minded members of the left to cut it some slack.

In this, the first in a series of articles on Sweden, I hope to convince the left to think more critically about the Swedish model if for no other reason than to put Bernie Sanders socialism into some kind of context.

The first place to start is with some discussion about the real origins of the welfare state, which was not in 20th century Sweden (or the USA for that matter) but under Bismarck’s Germany.

For the best appraisal of Bismarck’s “state-socialism”, the term that the Lassalleans would apply to his regime, I recommend the chapter in volume four of Hal Draper’s “Karl Marx’s Theory of Revolution” titled “Of State-Socialism”: Bismarckian Model”. Draper writes:

Bismarck was too shrewd to depend only on the policeman’s club. The stick to the donkey’s rear had to be supplemented by the carrot dangled in front.5 In the course of the 1880s Bismarck brought out a whole bunch of carrots. Familiar to us now, they then looked revolutionary to many: a series of social-welfare measures providing for accidents, illness, old age, and other workers’ disabilities.

Bismarck’s first proposal, for insurance against industrial accident. came in 1881 and was defeated in the Reichstag by the bourgeois parties. After all, Bismarck’s aim was not only to isolate the working class from the socialists but also to mobilize a “bodyguard proletariat” of its own i order to dish the liberal bourgeoisie and its demands for constitutional liberties, its aspirations for bourgeois dominance in the government and the weakening of absolutism. The new measures being proposed by the Bismarck government were going to be paid for by the class that was the government’s main target. The proletariat was not only supposed to come all over grateful to the state but also to turn antagonistic to the state’s main political opposition, the Liberals or “Progressive party.” But the bourgeois liberal deputies could not resist very long, in this as in anything else.

In 1883 a Sickness Insurance Act was passed, with the workers contributing only a third of the cost. In 1884 an Accident Insurance Law followed, with costs borne by employers alone. In 1889 an Old Age and Disability measure was adopted. In 1903 came a code of factory legislation, with a system of labor exchanges to promote employment. Many of these mea- sures were the first of their kind in the world; by the time of the world war Germany had become the model land of advanced social legislation, under the pressure of the absolutist state, not the bourgeoisie. (However, unemployment insurance was never passed; it took a revolution to achieve this reform under the Weimar Republic.) There was a connection between this beneficent program and the coming world war, for Bismarck’s social strategy had still another side: it was intended to ensure internal unity and class peace while the state intensified an aggressive foreign policy of colonialism and foreign-market penetration, thereby compensating the bourgeoisie (at least its upper reaches) for its social-welfare expenses. This foreign policy was also going to drive a wedge between the right wing and left wing of the Social-Democratic Party, but we will see only the beginning of this process before this chapter ends. In part to finance the technological substructure for war, Bismarck introduced another installment of “socialism”: a state tobacco monopoly in 1882 (a big source of revenue) and the nationalization of the railways. Here was something that began to really look like socialism to many people; at any rate, it was a definite intervention by the state into the economy, even if on a small scale.

As I will point out in my next post, the Swedish bourgeoisie and its partners in the social democracy had pretty much the same agenda.